A Closer Look at Biden’s 49 MPG CAFE Standard

The new Corporate Average Fuel Economy standards proposed by the Biden Administration# last month require an industry-wide fleet average of ~49 mpg for passenger cars and light trucks in model year 2026, the strongest fuel efficiency standards to date. On the face of it it appears to be sound policy. However, the devil is in the details. And lobbyists for special interests are largely hidden from public view.

The U.S. Department of Transportation’s National Highway Traffic Safety Administration set standards that will increase fuel efficiency 8% annually for model years 2024-2025 and 10% annually for model year 2026. They will also increase the estimated fleet-wide average by nearly 10 miles per gallon for model year 2026, compared to model year 2021 when voters Dumped the Trump anti-environment mis-administration. This badly needed revision is a 43% increase from the previous standard of approximately 28 mpg, thereby undoing the Trump Administration’s rollback of Obama-era standards in 2020.

Ken Zino of AutoInformed.com on A Closer Look at Biden’s 49 MPG CAFE Standard

Higher fuel economy standards without question strengthen U.S. energy independence and help reduce reliance on fossil fuels. It’s unfortunate that we fiddled for four years as we kept roaming about while burning fossil fuels. Since CAFE was signed into law in 1975, the standards have reduced American oil consumption by 25%, or approximately 5 million barrels a day since then. It could have been more. Now with Putin’s war raging and the oil markets rising and gasoline prices at record levels, what might have been is a rueful observation on the ghost of our past policies.

The new CAFE standards for model year 2024-26 will reduce fuel use by more than 200 billion gallons through 2050, as compared to continuing under the old standards. NHTSA projects the final standards will save consumers~ $1400***  (see but *** below) in total fuel expenses over the lifetimes of vehicles produced in these model years. Thereby avoiding the consumption of about 234 billion gallons of gas between model years 2030 to 2050. The agency also projects the standards will cut greenhouse gases from the atmosphere, reduce air pollution, and reduce the country’s dependence on oil.

Increasing vehicle efficiency and reducing fuel use will save American families and consumers money at the pump. Americans purchasing new vehicles in 2026 will get 33% more miles per gallon as compared to 2021 vehicles. This means new car drivers in 2026 will only have to fill up their tanks three times as compared to every four times that new car drivers today do for the same trips NHTSA claimed when the standards were released as Trump’s friend Vladimir Putin’s war on Ukraine raged.

“Today’s rule means that American families will be able to drive further before they have to fill up, saving hundreds of dollars per year,” said U.S. Transportation Secretary Pete Buttigieg. “These improvements will also make our country less vulnerable to global shifts in the price of oil and protect communities by reducing carbon emissions by 2.5 billion metric tons.”

The Center for Automotive Research has been studying the details of the new standard. Earlier this year, CAR analyzed the impact of CAFE trends on EV adoption in the US – namely, the role electrified light-duty trucks will play in the mass expansion of BEVs in the market. CAR researchers continue to evaluate how fuel economy rules and other sustainability-driven initiatives will impact automakers, consumers, and EV technology trends. One key point from CAR –  *** but it is estimated that the new regulations will likely drive up the cost of new vehicles by nearly the same amount touted as the cost of fuel saved.

NHTSA has also announced higher fines for automakers not meeting CAFE standards for model years 2019-2022. The penalties for model years 2019-2021 increased from $5.50 to $14 for every 0.1 mpg that new vehicles fail to meet, multiplied by the number of new vehicles sold that do not meet the standards. The fine for 2022 model year vehicles increased to $15.

Significantly, this is the first increase since 1997, when the penalty increased from $5 to $5.50. Most auto manufacturers have improved or  at least maintained estimated real-world fuel economy over the last five years, but some automakers will be hit with tougher fines. How this sorts out in the marketplace remains to be seen. (see chart above) Lower incentives and higher vehicle prices are already creating an affordability problem, along with inflation.

Ken Zino of AutoInformed.com on US April Sales Up 6.5%. SAAR Down -21.9%

# The final fuel economy standards follow President Biden’s Executive Order 13990, which directed NHTSA to review the 2020 “The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks” final rule. These CAFE standards also support the Biden-Harris Administration’s priorities to cut costs for American families, improve public health, combat climate change, and create and sustain good-paying jobs with a free and fair choice to join a union.

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